Aug 18 (Reuters) - ICE cotton gained on Friday, edging away from one-month lows hit in the previous session as the U.S. dollar strengthened, however, the natural fiber was on track for its second straight weekly decline on worries over higher U.S. production.

Cotton prices "are not done falling yet. We expect the market to move toward 65 cents over the next two weeks," said Rogers Varner, president of Varner Brokerage in Cleveland, Mississippi. "Perfect weather conditions (in U.S. growing regions) are bearish, but demand is a little bit friendly."

Cotton contracts for December settled up 0.37 cent, or 0.6 percent, at 67.28 cents per lb. It traded within a range of 66.68 and 67.5 cents a lb. In the previous session, prices touched their lowest since July 17 at 66.64 cents a lb. Prices were down about 1.4 percent for the week so far, in what would be a second consecutive weekly decline for the contract.

The first survey of U.S. 2017 crop production indicated an output of 20.5 million bales, 1.5 million above last month and the largest production in 11 year, the U.S. Department of Agriculture said in its monthly World Agricultural Supply and Demand Estimates (WASDE) last week.

Meanwhile, in top producer India, cotton output and imports were higher compared to the previous year, while exports fell, according to government data released earlier in the session.

The dollar index was down 0.25 percent. The Thomson Reuters CoreCommodity CRB Index , which tracks 19 commodities, was up 0.92 percent. Total futures market volume rose by 176 to 15,674 lots. Data showed total open interest gained 2,029 to 221,607 contracts in the previous session. Certificated cotton stocks deliverable as of Aug. 17 totaled 15,786 480-lb bales, down from 16,842 in the previous session.

(Reporting by Nithin Prasad and Nallur Sethuraman in Bengaluru; Editing by Marguerita Choy)